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How apropos that on the weekend of the annual convention
of Democratic Socialists of America taking place in Chicago the socialist
government of Venezuela is demonstrating yet again the inherent incompatibility
of socialism and democracy. It was not just a coincidence, in other
words, that twentieth-century socialism was defined by tyranny, dictatorship,
and oppression – and not democracy.

Nobel laureate F.A. Hayek explained how socialism destroys
democratic institutions in his 1944 classic, The Road to Serfdom. Socialism involves the forceful substitution of
governmental planning for the individual plans of all the citizens of a
country, Hayek explained. Such a system attracts as its political
leaders some of the most immoral and unethical people in society – those with
the fewest qualms about abusing their fellow citizens in the name of
achieving a socialist utopia.

Once the socialist plans are put in place, they
inevitably fail. Without capitalism’s market feedback mechanism that
rewards good customer service with profits and penalizes poor service with
losses, there is little incentive for efficiency. Socialist price
controls create nothing but chaos, usually by imposing prices so low that it
is impossible for a farmer or a merchant to make a living. The result,
which is on display today in Venezuela, can be economically
catastrophic. If the world has learned anything from the history of
socialism, it is that it is economic poison.

The rulers of a socialist government, Hayek further
explained, would “soon have to choose between disregard of ordinary morals
and failure.” This is true, I would add, whether the government is an
elected, democratic one or a dictatorship. This in turn will lead to
“the suppression of democratic institutions” and public demands for a
“strongman” or “strongwoman” who “can get things done” without the
inconvenience of democratic institutions. (Hence the dozens of “czars”
appointed by every American president). The socialist mindset also
accepts or even celebrates “intolerance and brutal suppression of dissent” in
the name of “the common good,” the rallying cry of socialists
everywhere. Just use the words “common good,” and all forms of
oppression are “justified.”

Hayek wrote these things in the 1940s but he could be
describing the rulers of democratic socialist Venezuela today. After
utterly destroying one of the most prosperous, oil-rich economies in Latin
America with the nationalization of industries, price controls, a gigantic
welfare state, oppressive taxation, and pervasive regulation of economic
life, the Venezuelan government became more and more dictatorial. Its
Supreme Court was packed with left-wing political hacks (something that FDR
famously attempted); opposition lawmakers were barred from holding office;
politicized judges overturned laws opposed by Hugo Chavez and his successor,
Nicholas Maduro; the Supreme Court ruled in favor of disbanding the national
legislature; two opposition leaders were recently kidnapped and imprisoned;
and a new political body, the “constituent assembly,” was created that,
according to the New York Times, would “grant virtually unlimited
authority to the country’s leftists.” This “assembly” is in the process
of replacing all non-socialist governors and mayors; writing a new socialist
constitution; and responding to the catastrophic failures of socialism with
promises of even more of the same but on a grander scale.

It is little wonder, then, that when Bernie Sanders was
asked by a television reporter during the 2016 presidential primaries if he
had an opinion about the economic situation in Venezuela, he had “no opinion”
for the first time in his political life. Meanwhile, the Democratic
Socialists of America are studiously ignoring history and reality this weekend
at their convention as they boast of a tripling of their membership (from
8,000 a year ago) thanks to the election of President Trump and the
popularity of the Don Quixote of their movement, Bernie Sanders.

Thomas DiLorenzo is professor of economics at Loyola College, Maryland, and a senior fellow at the Ludwig von Mises Institute. He is the author or co-author of ten books, on subjects such as antitrust, group-interest politics, and interventionism generally

The capital waste of the socialist doctrine is widely known and historically evidenced.Yet, despite the negatives, socialism has worked in one form or another very successfully here in the US and in most other countries of the world for centuries. One might be tempted to claim that capitalism, in its extreme, has destroyed as many economies throughout history also. We should not chose the worse case scenario on which to blame any theory we oppose. It can come back to haunt your credibility. Both socialism and capitalism are equally proficient for their intended uses, one for society, the other for business. It's just the extremes that we must worry about.

@ Recusant - I totally disagree. Capitalism is not for business, it is for the individual. Socialism only succeeds to the degree that it does not choke off Capitalism. Once the last vestiges of Capitalism are abandoned, Socialism collapses. Socialism makes one a slave to your fellow man's need. Capitalism, on the other hand, requires voluntary participation in a transaction. If either party to a transaction is not a willing participant, you don't have Capitalism, it's something else. Call it Crony Capitalism, or Fascism, but it aint Capitalism.